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Strategies & Market Trends : Buy and Sell Signals, and Other Market Perspectives -- Ignore unavailable to you. Want to Upgrade?

To: Chip McVickar who wrote (39530)	10/28/2012 4:20:42 PM
From: Chip McVickar	Read Replies (1) \| Respond to of 219353

John Hussman I strongly believe that more favorable return/risk prospects will emerge over the course of the coming market cycle, and that locking in elevated, distorted prices and depressed yields in the belief that “the Fed has our back” is a speculative mistake, a misguided superstition, and an analytical error. To embrace present market and economic data at face value–without recognizing that generating this data relies on enormous monetary distortions and government deficits–is like believing that you’re Louis XIV just because you’ve built a massive cardboard Palace of Versailles in your front yard. michaelcovel.com

To: Chip McVickar who wrote (39530)	10/29/2012 7:59:41 AM
From: Seismo	2 Recommendations Read Replies (1) \| Respond to of 219353

Hussman on GDP revisions: hussmanfunds.com Recession? The advance estimate for third-quarter GDP was released last week, showing a slow but above-consensus figure of 2% growth at an annual rate (paced by a 13% surge in defense spending). Surely, this is inconsistent with concerns about recession, isn’t it? No – not if we examine the historical pattern of data revisions early in previous recessions – a point that Lakshman Achuthan of ECRI also emphasized recently on Bloomberg. Recall that in 2001, with the U.S. economy already in recession for months, Q1 GDP growth was initially reported at 1.2%. That figure was actually revised slightly higher a few months later, but based on final revision, Q1 2001 GDP is now reported at -1.3%. As a side-note, Q2 2001 GDP was positive, while Q3 2001 was negative. The 2001 recession did not contain two consecutive quarters of negative GDP growth. Contrary to what many analysts suggest, that is not how the National Bureau of Economic Research (the official arbiter) defines a recession in the first place. The heavy revision of GDP figures is not the exception but the rule. In the first quarter of 2008, as another example, with the U.S. economy already in recession for three months, Q1 GDP was reported at 1% growth. That figure was later revised to -1.8%. Just like 2001, the following quarter was reported at positive growth. The economy then collapsed in the second half of 2008, but by the time that was evident in GDP figures, the stock market had already plunged. The upshot is that early GDP figures are often reported positive even after a recession is already well in progress, and waiting for two consecutive quarterly declines in GDP is a poor way of gauging recession risk, because that pattern sometimes doesn’t emerge until much later revision, if at all.